Long term impacts of household electrification in rural India

Submitted by Dominique Van De Walle On Wed, 10/02/2013

It is estimated that 1.3 billion people in 2009 were still without electricity. Many rural households in the developing world continue to cook with wood and biomass (mainly dung), and spend a lot of time collecting and preparing fuel for domestic use. Across the world, these time (and resulting health) burdens are thought to be higher for women and the children under their care.

One popular argument is that by relieving time burdens spent in collecting and preparing fuel, household electricity results in rural women engaging in market-based work — judged to be a good thing since women’s empowerment has been linked to having one’s own income. In fact, a number of studies show that the introduction of household electrical appliances accounts for a large share of the increase in married American women’s labor force participation in the 20th century. For the developing world, a recent paper by Taryn Dinkelman [1]finds similar and large effects on female employment (and not on male employment) for South Africa, which are attributed to the use of electric stoves and other time saving appliances.

There are reasons to doubt this as a generalization. Southern Africa turns out to be rather unusual in that rural households commonly use electricity for cooking. Data shows that rural households elsewhere in the developing world use electricity first and foremost for lighting, followed by powering televisions and fans. Since bio-fuels and firewood continue to be used for cooking, and even lighting alongside electricity (as in India), collection time is unlikely to be hugely affected.

While electricity’s productivity effect on domestic production may be weak in poor rural settings, electric lighting does extend the time available for activities needing good lighting. This may provide an alternative channel for impacts on women’s labor force participation. For example, domestic duties, other tasks and leisure activities can be reallocated to evening hours leaving more daylight time for labor supply. Electrification may also foster small home-based enterprises (such as ironing and sewing services) and longer hours for these to be productive. Against that, time watching television may well reduce the time on these activities. Furthermore, other formidable barriers to entry into market-based activities are also present in many poor rural areas, such as low education, weak access to land, credit and labor markets, and unfavorable social norms. So what is the empirical evidence for other parts of the world?

A recent paper, Long-Term Impacts of Household Electrification in Rural India [2](written with Martin Ravallion, Vibhuti Mendiratta , and Gayatri Koolwal), examines a period of huge expansion in rural household electrification in India during the 1980s and 1990s to better understand the household level impacts on labor supply (and consumption and schooling) as well as the channels for those impacts. The India Rural Economic and Demographic Survey (REDS) for 1982 and 1999 covers this key period of rising household level electrification, with detailed information on a panel of 6,008 households across 242 villages in 15 states. 53.6% of households went from being non-electrified in 1982 to being electrified by 1999. The data confirm that rural Indian households use electricity inside the dwelling almost exclusively for lighting, and running fans and TVs. There is no evidence that electrification resulted in the establishment of small scale self-employment that require appliances, such as tailoring.

The paper distinguishes the long-run village-wide external effect of electrification from the direct, internal household effect. We find that the external effect has a strong interaction effect with household-level electricity use, such that the external effect is asymmetric, favoring households without electricity. Indeed, we do not find that the external effect is shared by those who already have electricity.

In short, we find that household electrification increased both male and female labor supply. The principle village effect on labor supply is that connecting the village to the electricity grid increased the non-farm self-employment work of women. The effect is small but adds up to an extra week of such work over 10 years.

The largest increase in days of labor supplied attributed to household electrification is for the regular wage work of men, which rises by 16.6 days with electrification, representing 33 percent of the mean days of regular work in 1999. This extra work came mainly from reduced casual wage work (10.4 days). This is consistent with the argument whereby electricity allows men to switch leisure time from daylight hours to night time, allowing a more regular supply of labor, as required by regular salaried work.

For women the main effect was to increase their casual wage work, amounting to about 6 days per year. It is plausible that this involved the women taking up the casual work that was displaced by men. We cannot reject the null that the extra casual work of women came from unpaid domestic work or leisure.

Assuming that the income gains are fully consumed, our imputations of the income gains generated by the labor supply effects using gross wage rates suggest that about one third of the impact of electrification on gross earnings is lost due to foregone incomes stemming from displaced activities within the household. Of course, we can’t rule out the possibility that a share of the income gain from electrification is saved or directly invested.

We also find significant effects on schooling, but only for girls. This is suggestive of longer-term welfare gains. This gender difference may well reflect differences in the nature of the lighted time constraints on the type of work done within the household, whereby better lighting allows girls to re-allocate their time to permit school attendance, but matters less to boys, given that their work alternatives to schooling are more likely to be outside the home.

In conclusion, the paper finds evidence of impacts of household electrification on rural women’s labor supply, but these effects are lower than our estimated impacts on men’s labor supply. And impacts on women’s labor supply are not linked to time saving appliances. There is no doubt that better light, better air movement and entertainment bring welfare benefits. However, that may also come with increased demands on women’s time.